Escalation clauses and other concerns for HOT markets

There is no longer any question; the real estate market has been revived and is changing fast. Demand, pent up for several years, has roared back, especially in Charleston and on the Charleston Coast. Good properties that are priced right sell fast, and multiple offers are common once again. We’re also seeing some interesting circumstances which we believe warrant your attention, should you be considering a new purchase. First is the the escalation clause, where an offer includes a possible automatic increase in price to overcome competitive bids. Secondly, we are seeing circumstances where listings are being priced at well below recognized market value, for the sole purpose of attracting multiple bids and exceeding the listing price and occasionally the market value. As Kenneth Harney warns in an article on realdeal.com,

“They’re back after barely a decade: Escalation clauses in real estate contracts, “naked” contingency-free offers and lowball-priced listings designed to pull in dozens of bidders and turn routine sales transactions into auctions.”

To read up on these two new trends, and get a better perspective on the possible pitfalls of buying in the current market, check out these articles in the Washington Post and New York City’s The Real Deal: